How do I texture an object in Cycles
Cycles works with shaders.

Shaders determine how the light is transformed upon hitting a surface.



The error on your case is that you created a node in blender internal and not in cycles. You can use nodes in blender internal as well, but they are not compatible.

NOtice how the nodes are completely different in Blender Internal:



Materials are not interchangeable between the two rendering systems. You need to delete the material and make a new one within cycles.